The four-digit Pin will be phased out by 2020, according to experts as banks push hi-tech ways to pay including fingerprint-readers and mobile phones

The Pin number will vanish within the next five years as banks replace the four-digit password with new technology that reads your fingerprints, vein pattern or voice, according to experts.

Banks will nudge customers to use hi-tech readers or contactless payments in shops and ticket terminals instead of the typical “chip and Pin” by arguing it is safer and offering discounts for using the new technology.

Major banks, including Halifax and Barclays, argue that Pins are a “flawed” security barrier that fail to protect against fraud.

We have 80 experiments on the go where we test gadgets on customers to find out if it works and how they react Marc Lien, technology development at Lloyds Banking Group

So-called “personal identification numbers” were invented in the 1960s with the introduction of cash machines and there are around 10,000 different variations but because it can be written down or guessed, criminals are able to exploit this weakness.

Customers who write down their Pin, even in a disguised form, will be considered “negligent” under banking rules which means their bank does not have to return stolen money.

More than 96pc of transactions are used via chipped credit or debit cards and prevent fraudsters from spending in shops using just a copycat card.

But last year the British banking industry lost almost £480m in card fraud – more than any year in the past decade except for 2008.

The Pin will be “dead” by 2020 as a result because customers will lose faith in its ability to protect their money, according to David Webber of Intelligent Environments, which provides mobile payments software to UK high street banks, including Lloyds Bank and Halifax.

“Many customers fail to observe basic Pin security measures which demonstrates a dangerous ambivalence, putting them at risk,” he said.

Pins are already redundant for “contactless” spending in shops and at self-service ticket machines. Contactless spending, done via Apple Pay or a card, has increased by 200pc since the limit was increased from £20 to £30 in October, helped by many banks offering cashback to encourage its use.

In the long run biometric security will play a much bigger role and is advancing very fast Michael Mueller, Barclays technology expert

Mr Webber said banks should begin to prepare to phase out Pins as a result. “They should ready to start replacing it with more progressive security methods.”

For higher value transactions, banks are already acting to introduce increasingly hi-tech payment methods to make it “impossible” for fraudsters to impersonate a customer.

Michael Mueller is “head of cash” at Barclays but is at the forefront of the bank’s vein-reading technology that is already being used by business customers.

“A Pin is something that you know – but finger vein readers replace this with ‘who you are’ which we think is a lot more secure.”

The bank said it is “seeing how it goes” with handful of business customers before rolling it out to consumers. “It’s a significant part of our strategy and I can safely say it’ll be in years rather than decades,” said Mr Mueller.

But he argued Pins won’t “disappear anytime soon” because customers are too used to the four-digit passwords when they use cashpoints and for higher-value transactions in shops.

“In the long run biometric security will play a much bigger role and is advancing very fast. It will be phased in incrementally in the coming years,” he said.

But rival banking giant Lloyds Banking Group warned that some of the new technology is less secure than other forms. It is now trialling a wristband that reads a customer’s heartbeat, identifying a person by their unique bodily circulation.

“A heartbeat pattern is the most secure form of identification than fingerprint or iris scanning, because it cannot be replicated fraudulently,” said Marc Lien, a director of digital development at Halifax, part of Lloyds Banking Group.

Lloyds is now investing £1bn in its technology and says it has 80 experiments that are going on. “We test our gadgets on customers to find out if it works and how they react to it,” Mr Lien said. “At the moment we’re trialling technology that scans your eyes, along with looking into the use of fingerprints by the likes of Apple, and using systems that identify you by how you type on a keyboard.”

This article was written by Kate Palmer from The Daily Telegraph and was legally licensed through the NewsCred publisher network.